Many RMTs are small business owners and, as such, they often employ others to assist them in the operation of their small businesses. Other RMTs are employees working for someone else. In both cases there are a number of issues that each should be thinking about during and after the hiring process. This article examines the employment relationship (or employment “contract”) between an employer and employee in a non-union environment in British Columbia. It is intended to be a brief overview of the issues only and to canvass those issues that both the employer and the employee should turn their minds to when entering into that employment contract.

The Employment Contract

If your eyes have already started to glaze over at just the thought of an article about legal contracts, re-focus for just a few more sentences and see if it doesn’t seem a little more relevant to you by the end of this paragraph. The whole point of business law is to help parties involved in commercial relationships (such as an employer and an employee) to better organize their relationships and (hopefully) to avoid disputes in the future. And avoiding disputes is generally viewed as a positive thing because legal disputes are often very expensive. Enter the written contract. The whole point of a contract in writing is simply to try and avoid expensive and unnecessary disputes between parties to an agreement in the future. And that is what we will be discussing here – a few things to think about in the hopes of avoiding an expensive lawsuit in the future.

Now, if you’re married to a lawyer or, better yet, you just plum like lawsuits then by all means don’t read any further. Just turn the page and read the ad about how the latest monster SUV will give you a thinner waist and happier children. And I’ll be that person waiving at you from across the courtroom.

Great, you’re still here. Let’s move on then and see if we can’t shed a little light on employment contracts. All employment relationships are governed by that contract we’ve been discussing. And while the written contract is best, the employment contract may be in writing, oral, or a combination of both. And it may include policy manuals, legislative provisions and/or something we call “implied terms”, which simply means a term which the court thinks you meant to include but just did not write down.

There are many advantages to a written contract, of course, but two are particularly important. First, it is in each party’s interest to know from the outset what their respective obligations or promises to one another are. It’s not rocket science (if that really is a branch of scientific study) to realize that the best way to ensure that there is a mutual understanding of the agreement between parties and to avoid misunderstandings in the future is to commit it to writing. Second, if there is a disagreement between the parties later on, it will be easier (and cheaper – a lot cheaper) to resolve if there is a written contract.

Regardless of whether your contract is written, oral or both, however, every employment contract should consider a number of key issues.

Duties and Responsibilities

The contract should set out each party’s respective responsibilities and duties. If you want a receptionist to perform handstands and do cartwheels while answering the phones and greeting patients, spell it out ahead of time and in writing if, for no other reason than they may be a little surprised when you put down the foam mats in reception. On the other hand, if you’re just supplying something as mundane as parking, that too should be specifically spelled out. The benefit of a written contract is that it forces each party to consider and then agree in advance to what those responsibilities and duties will be which, again, helps to eliminate any future misunderstandings.

Confidentiality

Most employers want to ensure that their employees keep information about the business and its patients confidential. It is a mistake to assume that every employee will know to do this, or to treat it with the same level of seriousness that the employer thinks they should. It is very important that this obligation be very clearly spelled out . It should also be spelled out what will happen in the event that this obligation is breached. And the contract should contain provisions that also clearly delineate what an employee is permitted to divulge after their relationship ends. Again, a written contract will best serve everyone’s interest in this regard.

Non-competition clause

In today’s marketplace it is not uncommon for an employer and employee to become competitors once the relationship has ended. It is important to establish at the outset what the employee’s rights to compete with the employer will be after their relationship ends. Again, a written contract will like be the best (if not the only) way to accomplish this. But remember what they taught you in first year RMT classes: the non-competition clause cannot be overly restrictive in either geographic, subject or time limitations, or it will be unenforceable (you didn’t learn that? I’d complain to the instructor if I were you). An overly aggressive covenant will be invalid as a “restraint of trade”. For it to be relied upon, it must be “reasonable” (the courts really like that word).

Patents (not “patients”) and Inventions

Some employees will create an invention that improves the employer’s work process or product. And while something like this doesn’t happen every day admittedly, when it does, the litigation that can ensue over the ownership of that invention can be incredibly expensive and lengthy (see the famous case of Medieval Book Copiers Guild v. Johanes Gutenberg which I understand only just settled last year). So while it may seem a little overly cautious, it is important to make plain at the outset who will own any invention or process created in the course of the employment relationship, if such occurs.

How Can the Relationship be Ended?

The contract should set out clear termination provisions, that is, how the relationship can be ended by each party, and how much advance notice each party will have to give before being able to do so. The courts will generally enforce such provisions, provided that they do not fall below the minimum standards set by the Employment Standards Act. If there are none in your contract, then the courts will imply (remember “implied term” above) a notice period they think is reasonable in the circumstances. That is, the parties will be bound by what the courts think is appropriate rather than what they had intended. So to avoid the courts having to make up their own clause, turn your minds to it at the outset.

Terminating with Notice

There are a number of different ways the relationship may end, or be “terminated”. In British Columbia, generally an employer must give an employee advance notice that their employment will terminate at a specific date in the future. The employer will usually follow one of two courses here. The first is to permit the employee to continue to work until the future date. This is called ‘working notice’. The second is to terminate the employee immediately and pay them as if they had continued to work until the notice date in any event. That is “severance in lieu of notice” (the courts like the term “in lieu of” too). Again, in the latter method, the employer pays the employee an amount equivalent to what the employee would have earned if he or she had worked during the notice period. In any event, the agreement should set out what the notice period will be and what type of notice will be provided.

"For Cause"

While an employer can terminate an employee “for cause” whether or not it is specifically set out in the written contract, it will be easier for each party to know what specific things the parties have turned their minds as to as being cause for dismissal if they are defined in the written contract. If there is no definition of “cause” in the written contract, the courts have in the past found that an employer had cause to dismiss an employee if the employee was: dishonest; incompetent; insolent; or in a conflict of interest. But don’t worry if you trip over the furniture and break the Ming vase in reception on your first day - it is rare that a single instance of incompetence constitutes just “cause”. On the other hand, if you also break the next three replacement vases, you might want to consider moving on.

Constructive Dismissal

Constructive dismissal is where a “fundamental” (or important or material) change in the employment contract occurs. If an important term of the employment contract is changed by one party without the other party’s consent, the non-consenting party can then treat the contract as being at an end (or terminated). If the employee is the non-consenting party, they may then choose to sue the employer for wrongful dismissal. The determination of whether an employee has been constructively dismissed is based solely on the facts of each particular situation, so setting it out in writing beforehand will not assist much. But some of the instances where the courts found a constructive dismissal to have occurred include (but are not limited to) where there has been: a significant reduction in salary, change in work location, significant change in job responsibilities or duties (eg. requiring that receptionist to do handstands), or demotion.

Resignation

An employee is permitted to resign from their employment at any time. They should also give notice of their intent to do so. And while an employer may sue for damages resulting from their departure if they do not give adequate notice, it is rare for that to happen. As a practical matter, the employer should instead simply hire a replacement as soon as possible.

And there endeth our brief overview of some of things you should be thinking about during the hiring (and firing) process. And, of course, whatever you agree upon at the outset, make sure it is documented properly in writing. Either that, of course, or just buy your lawyer’s new BMW for them now and get it over with (personally, I’m partial to any model in British racing green).

Scott Nicoll
Hamilton Duncan Armstrong & Stewart Law Corporation
604.581.4677
sln@hdas.com